Auburn University philosophy professor Roderick Long coined the term “conflationism” for the tendency to confuse the free market — whether in accusatory or apologetic polemics — with actually existing capitalism. Left-conflationism is the practice of attacking the evils of actually existing corporate capitalism as if they were the result of “laissez-faire” or the “free market.” Right-conflationism is the mirror-image defense of the status quo, as if “the imagined virtues of the imaginary freed market constitute a justification for the reality of existing corporatist capitalism” — that is, cloaking the defense of corporatism in “free market rhetoric.”

The January 21 issue of The Economist, which is dedicated to the theme of “State Capitalism,” is a stellar example of right-conflationism. The writers equate “State Capitalism” to some degree of state ownership and/or control of business firms competing in the marketplace, or to what used to be called “industrial policy” (i.e. government directing investment funds to those it regards as economic “winners”).

State Capitalism includes the Chinese model, in which the state organizes the Chinese equivalent of vertically integrated zaibatsu and reserves a major share of seats in senior management for government officials; Russian-style kleptocratic or oligarchical capitalism; and the petrostate State Capitalism in which the state directs petrodollars into state-favored development projects.

Such forms of “state-directed capitalism,” of course, are contrasted with the wholesome Anglo-American model of “liberal capitalism.” You know — what Mitt Romney calls “Our Free Enterprise System.” The ’80s and ’90s, it seems, were an era of “free market triumphalism” under the Great Helmsmen Thatcher and Reagan.

Well, not quite. So-called “liberal capitalism” has its own “reserved chairs,” it seems — for former corporate management as political appointees in federal agencies, and for former regulatory officials in the senior management of large corporations. Anyone who’s seen the recent virally circulated Venn diagrams of the personnel overlap between Monsanto and USDA personnel, or Pfizer and FDA, will immediately know what I’m talking about. And US President Barack Obama — that “socialist” fan of Saul Alinsky we hear so much about — certainly seems to have reserved a lot of seats in his Cabinet for former Goldman-Sachs and Monsanto higher-ups.

I wonder what the writers at The Economist think of a model of “liberal capitalism” in which international “Intellectual Property” accords are drafted in secrecy by representatives of the Motion Picture Association of America and Recording Industry Association of America, and only afterward offered for review to other “civil society organizations.” Or in which MPAA chief Chris Dodd proudly announces that the Stop Online Piracy Act was drafted in a “democratic process” in which “all the major stakeholders” had seats at the table (“all the major stakeholders” apparently consisting of the music, movie and software companies).

I wonder what they think of a transnational corporate economy in which the major “Western liberal capitalist” players are dependent on direct state subsidies, state-enforced “intellectual property” monopolies, or both for their profits.

Think about it. First, you have firms directly plugged in to the military-industrial and security-industrial complexes, with the DOD or TSA as their primary customers. You have the electronics industry, whose R&D was primarily government-funded throughout the Cold War, and which is protected from global competition by the drastic expansion of patent protections under the TRIPS accord. You have the biotech and pharmaceutical industries, at least half of whose research is taxpayer-funded and which are heavily dependent on government patent enforcement for their monopoly profits and market shares. And you have corporate agribusiness — ’nuff said.

Subtract all this, and what do you have left? A model of capitalism in which the commanding heights of the economy are an interlocking directorate of large corporations and government agencies, a major share of the total operating costs of the dominant firms are socialized (and profits privatized, of course), and “intellectual property” protectionism and other regulatory cartels allow bureaucratic corporate dinosaurs like something out of Terry Gilliam’s Brazil to operate profitably without fear of competition.

"I wonder what the writers at The Economist think of a model of “liberal capitalism” in which international “Intellectual Property” accords are drafted in secrecy by representatives of the Motion Picture Association of America and Recording Industry Association of America"

Here in the UK the Conservative-led government did something similar in its review of policy on obesity, alcohol and diet-related disease, with a committee whose members included representatives of McDonalds, KFC, PepsiCo, Kellogg's, Unilever, Mars and Diageo. Not that the NHS couldn't do with a few changes (mutualisation rather than privatisation, for example), and not that our previous neo-liberal Labour government were any better, but it's still a facepalm moment when you read stuff like that.

Anyway, I just wanted to say thank you for your writing, here and elsewhere. A lifetime ago I was a teenage Marxist, then almost by default I was a 'big state liberal', but latterly I've been more in tune with the pre-Fabian left, and even more recently with ideas from anarchism and the anti-statist left. So many interesting ideas, I'm learning a lot.

Yes, it’s puzzling that both intellectuals and mundanes regard America’s brand of cleptocracy managed fascism as the purest form of free market capitalism. It proves that if you repeat a lie often enough most people will eventually believe it.

The interesting thing for me, is the idea that the anarcho-voluntaryist cohort (in which I include myself) seems to want to retain the word 'capitalist' – even though since Marx & Engels it was clearly meant to be used as a pejorative, reading in much the same way as we would deploy 'crony-capitalist' (the Cheney/GoldmanSachs/Hailliburton/Raytheon model) today.

Even the original use of the term 'capitalism' – in Thackeray's "The Newcomes" – is in a passage that discsses at length, the machinations of a bunch of parvenus who use their resources to gain influence within the POLITICAL system; the notion that 'capital' enables entree into, and subversion of, political life redounds throughout the preceding paragraphs.

Lastly, but not leastly: should we really be surprised that The Economist – little more than a cartoon, these days – is simply an echo chamber for 'received wisdom' as furnished by court intellectuals? If this was 1616 and the matter at issue was heliocentrism, you can bet The Economist would run feature that endorsed the opinions of Cardinal Bellarmine and Pope Urban.

"The Economist" failed to forecast every event of economic significance in the last 20 years, and as each fan-splat happened, was adamant in its fawning re-broadcast of the assertions of the political class that matters were now firmly in hand. The Economist was amongst those who fawned over Greenspan, as they fawn now over Bernanke.

And it goes without saying that the Economist does not just have a blind spot when it comes to cronyism and a corporate-political nexus in the US; it extends the same 'professional courtesy' to other Western governments. It knows on which side its bread is buttered, in the same way as Bill Keller and the NYTimes do.

The original meaning of "capitalism" was (relatively) free trade and free markets. Sure it was a perjorative but one that didn't reference any actual evil. So why not like the GLBT crowd before us, appropriate the term? Ayn Rand was quite upfront in using terms to deny them their power. If we use the term "capitalist" unashamedly we get to say "We're not ashamed of capitalism because it's not shameful.". I see the problem, but just granting the definition of a term to your enemies is never good.

That's what most people think – that 'capitalism' in its original usage meant the same thing as 'free markets' or 'laissez faire'. In the same way, many folks have the misguided idea that 'anarchy' means 'chaos', simply because that has become the dominant usage in common parlance.

The 'capitalism'=='free-markets' is what I thought until a very interesting course I did as an undergrad ('Capitalism: Contrasting Views'), which showed by reference to the literature of economic history that the non-pejorative usage is recent and not what was intended by the originators of the word. (That's why I know the Thackeray reference – these days it's hard to even imagine a genuinely rigorous Economics course where you have to read English literature instead of doing relatively-trivial algebraic gymnastics).

'Capitalist' certainly meant 'owner of capital' when it was first coined (in the 17th century in Holland), and little more than that. It's a relatively 'judgment free' word.

The word 'capitalism', however, sought to focus the mind on the idea that the owner of capital would, past some point, begin to use his resources to 'tilt the field' in his own favour (nothing controversial there – it's basic optimising behaviour).

Taken further, it implies a system whereby owners of capital as a class would combine and suborn the political process – by dint of the extreme overlap between owners-of-capital and aspirants-to-political-office, and also the fact that politicians are inherently corrupt and parasitic.

Again – this is hardly controversial, given the abundance of observable data that validate the idea: large corporations routinely get law passed that advances their interests at the expense of the broader economy (as opposed to Rand's absurd cartoon railway run by cartoon philanthropic owners who simply want to make the best damn railway there ever was… could there be a more clear example of idiotic bourgeois salon-intellectualism written by someone who had no understanding whatsoever of actual production or business?).

To the extent that the outcomes of the nexus between capital (qua class) and politics are deleterious to the welfare of other classes (and to 'society' as a whole, to the extent that such a thing exists), the core question becomes how to ameliorate those deleterious consequences.

Envious parasites (like Marx) and soft-headed inbred idiots (Engels) claimed that the appropriate place for the constraint was on capital – that the State could be trusted because State actors abrogated their individual maximisation strategies and adopted instead a strategy that sought to maximise social utility (how Marx etc arrived at that nonsense is anyone's guess… perhaps they believed in angels).

When Proudhon wrote his excoriations of "capitalism", it was not an attack on private property or voluntary exchange per se (after all, he wanted artisans to be owners of their tools and the recipients of the value of their own output). Proudhon's attack was an attack on concentrated wealth and its ability to influence politics to the detriment of the worker. In that, Proudhon reveals a childish belief in some Rousseau-eqsue idyll where everyone toils nobly… but guys like him would shit bricks if they had to work that hard.

Like Marx, Proudhon failed to acknowledge that capital accumulation can be the result of things other than political corruption. (Proudhon's stuff is far less idiotic than Marx, but it's still pretty stupid).

Lastly, I would not ever quote Ayn Rand in support of a pro-market argument – her work is more cartoonish than Marx (and Marx is garbage): furthermore, her personal values were those of a 'correct line' despot who was desperate to construct a cult of personality around herself. Rand is to political and economic philosophy, what L Ron Hubbard is to theology.

I'm a voluntaryist – which means private property, voluntary exchange, unfettered freedom of association, the non-aggression principle… and (for me) a deep and abiding hatred of charlatans like Ayn Rand.

Aussie: My impression is that Rand chose "capitalism" precisely for its in-your-face connotations with plutocracy a la Bounderby of Cokestown and Mr. Moneypenny. So those of us who find such things distasteful might find a word she deliberately identified with them also distasteful.
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But talking of “The Economist”, didn’t I see a reference around here to one of its articles last year that actually cited Kevin Carson? Maybe someone can provide a link to it, since that would be quicker than a search.

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